Facing the Euro: Prospects for growth or stagnation?

The introduction of the euro has been overshadowed by the controversy over the appointment of the president of the European central bank and the possible implications for the bank’s policies. The effects of the launching of the single currency on growth and employment depend on a multitude of factors, however. Professor Welfens analyses the potential benefits of EMU and discusses the problems to be solved.     

Economic reforms in Eastern Europe: Basic problems,options and opportunities

The events in August in the Soviet Union demonstrated drastically the difficulties faced by the countries of Eastern Europe in the transition to a market-based system. The following article analyzes the specific distoritions in their economies which this process involves. The author argues in favour of radical reforms at an early stage, but also emphasizes the importance of sustained and gradual reform steps in the longer term to deal with the accumulated distortions. This is a revised draft of a testimony by the author before the United States Senate, Washington, D.C., March 23, 1990.     

The ETS in China and Europe: dynamics,policy options and global sustainability perspectives

The Emission Trading Schemes of China and Europe show that China’s envisaged national ETS could bring a major contribution in the international approach against global warming; new perspectives on the use of composite sustainability indicators are also highlighted. China’s regional pilot schemes will converge to a (more) uniform price of emission allowances. As China is a major economic and political actor in the world economy, China’s progress with ETS is important. At the same time, China’s progress in the field of green international competitiveness – standing for a positive revealed comparative advantage in environmentally friendly goods – in the period 2000–2015 is considerable and the improved positioning of China in the EIIW-vita sustainability indicator shows considerable technological dynamics in Asia. The European ETS is working, but it suffers from the rather low price of emission allowances. The long-term time horizon of 2050 in the EU climate policy is rather ambitious and it is unclear whether or not a consistent G20 approach can be achieved – with the EU, China, Japan and the US cooperating amongst each other. There is a lack of a specialized climate stabilization institution in the world economy, the traditional anchoring of climate policy in the UN weakens the practical pressure for efficient cooperation since the UN is very heterogeneous in terms of per capita income and GHG emissions per unit of GDP; G20 might be an institution that is suitable for effective policy cooperation. More initiatives in the field of recycling could be useful.     

Macroprudential Risk Management Problems in Brexit

Brexit is not only a historical chapter of the British — EU relationship, but it also carries immense challenges for fi nancial market stability in the short and medium run for the 28 member states of the European Union. The scale of these challenges depends heavily on the outcome of EU-UK negotiations. The European Systemic Risk Board plays a critical role in macroprudential supervision, a crucial policy challenge for the EU. However, there are doubts as to whether it will fulfill its mandate. The EU27 faces major problems in terms of prudential supervision after Brexit since a very large part of their wholesale banking markets are in the UK and thus will not be regulated by the EU after 29 March 2019. Indications point to a considerable risk of a new transatlantic banking crisis in the future.     

Global economic sustainability indicator: analysis and policy options for the Copenhagen process

The traditional discussion about CO₂ emissions and greenhouse gases as a source of global warming has been rather static, namely in the sense that innovation dynamics have not been considered much. Given the global nature of the climate problem, it is natural to develop a more dynamic Schumpeterian perspective and to emphasize a broader international analysis, which takes innovation dynamics and green international competitiveness into account: We discuss key issues of developing a consistent global sustainability indicator, which should cover the crucial dimensions of sustainability in a simple and straightforward way. The basic elements presented here concern genuine savings rates—covering not only depreciations on capital, but on the natural capital as well—, the international competitiveness of the respective country in the field of environmental (“green”) goods and the share of renewable energy generation. International benchmarking can thus be encouraged and opportunities emphasized—an approach developed here. This new EIIW-vita Global Sustainability Indicator is consistent with the recent OECD requirements on composite indicators and thus, we suggest new options for policymakers. The US and Indonesia have suffered from a decline in their performance in the period 2000–07; Germany has improved its performance as judged by the new composite indicator whose weights are determined from factor analysis. The countries covered stand for roughly 91% of world GDP, 94% of global exports, 82% of global CO₂ emissions and 68% of the population.